Item C: Measure 37 Givings Tax - Laserfiche WebLink

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zone, etc.) be examined? If a flat percentage is used, what percentage should be used for a draft ordinance? Option 3 – Legislative Change Tax: When the council adopts legislative changes to land use regulations, Metro Plan or refinement plans, depending on the nature of those changes, it is possible that the changes increase the real market value of certain properties. For example, if the council amends the Land Use Code to expand the types of uses in a particular zone, or relaxes a height or setback restriction, or increases the maximum density for a particular type of zone, the value of a certain property may increase. This option would involve imposition of a tax on the estimated increase in real market value resulting from an amendment to the Land Use Code, a legislative change to the Metro Plan or to a refinement plan. Only legislative changes that result in a significant increase in real market value would be used to determine the basis of the tax. It would be beneficial for the City to obtain the services of a certified appraiser or economist with experience in property appraisal to identify the significance of legislative changes by estimating the resulting typical marginal increase in real market value that may occur. The tax would not be imposed until a triggering event occurs. This might be when a citizen-initiated building permit application is submitted. Payment of the tax could then be a condition of issuance of the permit, eliminating a need for a separate billing, collection and enforcement process. When a triggering event occurs, the change in real market value from the applicable legislative changes would then need to be calculated. For this step in the process, the City could retain a certified appraiser to perform a property-specific appraisal to estimate the change in real market value resulting from the applicable legislative changes. It is likely that the cost of individually appraising the property to determine the basis for the tax would be several thousand dollars and in some cases could be higher. Under this option, a list would need to be kept by the City of each legislative change that has the potential of increasing the value of property. When someone applies for a building permit or land use approval, the City would need to examine the list to determine whether the proposed development would be relying on (i.e., taking advantage of) one or more of the changes. If so, an appraiser would need to determine the amount of the increase in value and a tax calculated. There will be a significant administrative cost associated with tracking this information. About 2,250 permits were issued for new building, additions and alterations in 2005. Estimates of the number of permits that would be subject to the tax, the potential tax revenue, and cost of implementation will depend upon council direction and further analysis. However, it would be reasonable to say at this time that between one and four FTE would likely be required to accomplish review of permits or sales, track legislative changes and property, handling public inquiries, administering appeals, and possibly making appraisals, billing, collecting and enforcing the tax, at a cost of $100,000 to $400,000 annually. Implementation of this option also has the potential of delaying high-priority work tasks for PDD. The extent of any such delay is impossible to estimate until staff begins implementing this task. Focused Decisions - If the council chooses to move forward with this option, the following focused decisions will provide direction to staff for development of a draft ordinance: L:\CMO\2006 Council Agendas\M060522\S060522C.doc